Steps in Leasing a Restaurant

Restaurants of all kinds occupy spaces everywhere in the city. These spaces are either owned or rented by the owners. If the owner has enough money, he can buy the space and make it his own. But if he does not have enough capital, he can sign a lease contract instead. Building a space means constructing everything from scratch and results in more expenses. However, in leasing one, only minor repairs and some cleanup work will need to be done.

So, what exactly is a lease in the first place? A lease contract is an agreement between the user and the owner of a building or piece of equipment. Stated in this contract is the method of payment to be done by the lessee (user) to the lessor (owner) and other concerns.

Finding a restaurant space to lease is a tough job. It is not easy to find one given the number of restaurants popping up almost every day. So for a brief guide on leasing a building for your restaurant, read on.

Commercial Lease Agreement Template

Things to consider before leasing a restaurant building

There are several things to consider before you can decide to lease some restaurant space. All are important in making the lease agreement a smooth, hassle-free experience for all involved.

Location – Find a location that best suits the concept of your restaurant. You should also consider the amount of foot traffic the location can generate. For example, setting up a restaurant that serves French cuisine in a rural area is a guaranteed recipe for disaster. So search for the right spot where you can easily reach your target market and set up shop there.

Space – No matter what kind of restaurant you want to put up, space always matters. Find out if it is big enough for you to operate your business. Check how big the kitchen is because that will determine the amount of food you can make. See if the dining room has enough space for all the customers you intend to attract. The more space you have, the more things you can do in terms of designing your dining area or purchasing kitchen equipment.

Amenities – Check out if the space has some good amenities necessary for operations such as a consistent water supply, safe electrical wiring, ventilation, garbage pickups, and parking area. Find out if you would need to do some renovations to the building in order to accommodate your business needs since that can affect the cost of your lease as well as your budget.

Background check – Do a background check on the area and the landlord himself. There might be unpleasant previous experiences of other renters that might make you rethink your options.

Iron out the lease contract – After checking everything, it is time to negotiate with your landlord on the lease terms. This is a step which should be taken carefully. Work it out with the landlord how much you would pay for a year. Some landlords do not let you pay before you start occupying the building. There are times when you have to pay a very low amount on the first year of the lease and the amount increases in the coming years. The terms of your payment are typically settled during the negotiation phase, so be sure you get the best deal. Once the parts of the lease document have been ironed out, agree on a move-in date and finalize the contract.

Things to negotiate before signing a lease

Now that you have identified your ideal restaurant space, here are some items you need to negotiate with your potential landlord before signing an agreement.

Rent start date – Some landlords can waive payment for up to 90 days, or until after your restaurant officially opens. Check if this would be possible so that you will not have to start paying rent for the space while you are still renovating and setting it up for your restaurant.

Operating expenses – Watch out for fine print regarding property taxes and insurance fees. Agree on who will be paying for such items before you sign anything, or you could end up paying for administrative fees that you were not made aware of when you signed the contract.

Termination clause – Identify the conditions by which the lease may be terminated or canceled in the future. For example, ask for a one-time option to cancel the lease within a specified time period in case your plans fall through, or if you would like to explore other options that recently became available to you.

Future rental fees – Get your landlord to agree to specific terms when it comes to future increases in rent. Since prices can be based either on market value or percentage increases, opt for the latter since it can come out cheaper in the long run.

Renewal options – Finally, talk to your landlord about your options to renew the lease in one- or two-year periods. You can also negotiate renewal terms, so you have the option to refuse to renew when certain conditions are not met.

Things to do after getting your leased space

Once you have successfully leased the space for your restaurant, there are some other things you need to do to ensure the smooth flow of your business.

Minor repairs – Take note of the entire building’s condition and things that have to be repaired, then make a plan for fixing these minor issues. If there is some faulty electrical wiring, hire an electrician to take care of it right away. If the plumbing is a bit faulty, get a plumber to make sure everything is in tip-top shape. Do not forget to fix any roofing or flooring problems as well.

Clean up – Cleaning up the place is important once you get your lease. It’s one basic thing to do before setting up your restaurant. Engage the services of a professional cleaning crew with experience in cleaning for restaurants so you can be sure that the entire place will be thoroughly clean and sparkling.

Furnish and decorate the space – Once everything is neat and orderly, go about the business of putting in the necessary furnishings and decor items in your restaurant. You would do well to hire an interior decorator to help you figure out the best way to maximize the available space while making it look gorgeous.

Always keep in touch with the landlord – Keep a line open to your landlord and contact him whenever you have questions or clarifications regarding the contract or the place itself.

Keep the space well-maintained – Even if you are just leasing the space, you have a responsibility to take care of it. Be sure to train your staff to keep the place spotless and take care of any issues like leaky faucets right away.

Leasing a restaurant space takes time and energy. You have to get through a lot of hassle and hard work, but seeing your business boom is worth the money you spent in making it happen.